A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours.The company's choice of the denominator level of activity affects the Variable component of the predetermined overhead rate.

Question

Quizplus · Accepted Answer

The denominator level of activity affects the fixed component of the predetermined overhead rate, not the variable component, which is based on actual usage.

A Company Has a Standard Cost System in Which Fixed